UK/EUROPE - Attempts to introduce an ethical investment policy to the £4.3bn (€5.5bn) Merseyside Pension Fund (MPF) have so far met with failure, however the latest resolution passed by Liverpool City Council in July may just be "bland" enough to allow scheme members to have a say in where their money is invested.

But while unions, anti-war campaigners and councillors have been continually lobbying the pension fund to take an ethical stance on investments, particularly on those related to the arms trade, the question yet to be answered is do individual members care where their retirment income comes from?

The original resolution put forward by Liverpool and Knowsley councils - two of the five local authority employers covered by the pension fund - requested the pension fund divest from companies involved in manufacturing weapons, but this was rejected in November 2007 on the grounds it would be against the fiduciary duty of trustees. (See earlier article: Legal threat to pensions arms trade decision)

Following that rejection, Alec McFadden, president of Merseyside TUC, admitted there was three months when the campaign stalled while the proposal was "re-evaluated" before going back to Liverpool City Council.

This rethink led to a "more bland" proposition being put forward by Richard Oglethorpe, a Liberal Democrat councillor on Liverpool City Council, in that it only asks the pension fund to consult with members on the possibility of an ethical investment policy.

Oglethorpe said: "The fiduciary duties of trustees and officials is seen as a stumbling block, but there are two or three strands to this issue. One is the common sense view that members should have a say in investing, not in every investment decision, but certainly on the ethos of the fund. The fund should be more democratic and if that requires legislation, then we will pursue that."

In the meantime, he claimed "there is no practical or legal impediment" to stop Merseyside pension fund from consulting on this issue, and even suggested members could be balloted by including a pull-out slip and a freepost envelope with the regular newsletters and information sent out to members.

But will giving members this choice be the trigger to changing investment policy that  Mcfadden and Oglethorpe think it will be? As while some members may not care where there money is being invested, others may be have been aware and frustrated that there is nothing they can do to prevent it or to make their views known.

Marilyn Jones, a member of the scheme, told she has been "pressing for a disinvestment of my pension in the arms industry for a number of years", both individually and through membership of the Green party.

However she claimed: "It seems that MPF and the pensions committee on Wirral Council are completely unwilling to budge on this despite Liverpool and the other Merseyside Councils involved wanting change.
"This is completely undemocratic to ignore the wishes of the other councils - and there must be very many other pensioners and contributors to MPF who feel as I do but Wirral Council is blocking their views being known by denying even a ballot of their views."
This is particularly frustrating for Jones as she claimed as a pensioner "there is nothing else I can do to prevent my money being invested in arms dealing as I cannot move my pension".

McFadden, who is also a member of the MPF scheme, said: "When you sit down with people, most don't want an extra £1 a week for the sake of investing in nuclear weapons. Personally, I would rather receive a smaller pension than have blood on my hands, as in reality that's what it is."

But while Liverpool voted unanimously in favour of the resolution, it still needs to receive support from the other councils and the pension fund committee, and Wirral Metropolitan Borough Council - the authority overseeing the pension fund - has already stated it "does not agree that a ballot is necessary".

McFadden also revealed there have been suggestions from within the scheme that a member ballot would be a "tremendous cost" to the pension fund, however he warned if any objections over the cost of the ballot stop the resolution being passed, then campaigners may involve the Pension Ombudsman and ask for a ruling.

And should the resolution get approval from the pension fund committee and Wirral council, McFadden said a "huge awareness campaign" would be launched to make sure scheme members know about the ballot and what it means.

McFadden said: "We will win it eventually, it's not a case of if but of when, and then there will be a snowball effect across other pension funds, which is one of the reason why it is being resisted so much." 

As a result, additional pressure could be placed on the pension fund through plans by campaigners to stage an international conference on ethical investment alongside the possible introduction of a private members bill into parliament which would focus on ethical investment of pension funds as a national issue and not just for the MPF.

Changes to investment policy driven by members has already been seen in other European countries such as the Netherlands, where revelations by a television programme - that Dutch pension funds invested nearly €300m in armaments - led to campaigns by pressure groups and the establishment of a "practical commission" in April 2007 to review SRI policy. (See earlier article: No need for new SRI commission - Hummels)

Scandinavian countries are also already focused on ethical investment, with Norway's Government Pension Fund - Global currently reviewing its ethical guidelines. (See earlier articles: Norway consults on ethical pension guidelines)

Earlier this year, Sweden's four national buffer pension funds, AP1, AP2, AP3 and AP4 also published the first report of their joint ethical council, which listed companies it had excluded and those it is working with over "ethical breaches". (See earlier article: AP Funds in dialogue with 13 firms over 'ethical breaches)

Oglethorpe said: "A number of other organisations operate ethical pension funds within the law, so why can't we. If the law needs to be changed then we will do it, just because people say it won't work doesn't mean it can't be done."

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email